So if seller keeps the first mortgage - and I, the buyer - either
A. split my payment in two - giving portion to seller to pay first mortgage and the other to pay seller on his second mortgage.
or
B. set up an escrow agent who will disperse the monies appropriately.
Now, my question is this
Wouldn’t we have to contact the original lender to settle any DOSC issues?
Even if the seller is still making the payments - isn’t the deed transfer an issue here? (isn’t a quit claim deed filed to clear title - at the county offices?)
typically you would set it up as a contract of sale. this was very popular in the early 1980s in calif. to circumvent the due on sale clause issues. using a contract of sale, you would receive equitable title rather than actual title. if you miss a payment, you COULD lose your property. typically this type of sale is not recorded (because if you record it the lender of record can find out about it).and monies are disbursed by an escrow agent to the lenders.
may get popular again as markets slow down, interest rates rise and sales become harder to consumate.
There’s a due on sale clause issue period. No matter what anyone tells you.
That being said, conventional wisdom is that if you pay on time what lender would mess with a performing note?
And the answer is Washington Mutual that called due 7 notes on an investor I know, and Wells Fargo that called 2 due on another investor.
Nevetheless, though there are exceptions it’s still a pretty good bet they’ll leave you be.
I would NEVER let the seller be responsible for making payment on a subject to. How would you like to sell on a lease option or land contract (wrap) only to be foreclosed upon?
How about VA loan? since FHA and VA are assumable loans. They shouldn’t have Dos. I am thinking about selling one of my porperty, which has 5.5% VA loan on it, with warparound Mtg. I think I will have a RE attorney to set it up for me. Anyone have any idea how much would cost?
Q: Does having a VA loan limit a veteran’s right or ability to sell the property?
A: No. A veteran may sell the property to a veteran or nonveteran at any time. However, if the loan was closed after March 1, 1988, and it will be assumed, the qualifications of the assumer must be reviewed and approved by the lender or VA.
Q: When a veteran sells the property to someone who will assume the existing VA loan, is the veteran released automatically from personal liability for repayment of the loan?
A: No. If the loan was closed after March 1, 1988, the lender or VA must be notified and requested to approve the assumer and grant the veteran release from liability. If the loan was closed prior to March 1, 1988, the loan may be assumed without approval from VA or the lender. However, the veteran is strongly encouraged to request a release of liability from VA in order to avoid owing a debt to the Government if the loan assumer (or a subsequent assumer) fails to pay the loan.
All notes are potentially assumable. There hasn’t been a non-qualifying assumable VA & FHA note in almost two decades.
While there MAY be notes out there that closed in 1988-- it sure isn’t likely. Most of those notes have been paid off or refinanced by now. Think about what a great mortgage rate was in 1988…